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 Related Quotes
 Electronic Arts Inc  128.57   0.67  0.52%
 Enter Symbols: 

Electronic Arts Reports Strong Q3 FY24 Results


EA SPORTS FCTM Momentum Continues, Driving Record Live Services Net Bookings

REDWOOD CITY, Calif., Jan. 30 /BusinessWire/ -- Electronic Arts Inc. (NASDAQ:EA) today announced preliminary financial results for its third quarter ended December 31, 2023.

"Our incredible teams delivered a strong Q3, entertaining hundreds of millions of people across our portfolio, driving deep engagement and record live services," said Andrew Wilson, CEO of EA. "We remain focused on growing our biggest franchises and delivering new, innovative games and experiences for our global communities."

"EA SPORTS FC outperformed expectations again this quarter, delivering 7% year-over-year net bookings growth, as momentum continued through the FC brand transition," said Stuart Canfield, CFO of EA. "We will continue to build upon the strength within our portfolio, while prioritizing investments in our largest opportunities for multi-year growth."

Selected Operating Highlights and Metrics1

  • Net bookings2 for Q3 was $2.366 billion, up 1% year-over-year (up 2% in constant currency).
  • Live services and other net bookings for Q3 achieved a record $1.712 billion, up 3% year-over-year (up 5% in constant currency). On a trailing twelve-month basis, live services were 73% of our business.
  • The EA SPORTS FCTM franchise outperformed Q3 expectations, delivering 7% net bookings growth against a prior year that included the World Cup.
  • EA SPORTSTM Madden NFL delivered net bookings growth of 5% year-over-year.

Selected Financial Highlights and Metrics

  • Net revenue was $1.945 billion for the quarter.
  • Net cash provided by operating activities for the quarter was $1.264 billion, up 13% year-over-year. For the trailing twelve months, net cash provided by operating activities was a record $2.352 billion.
  • EA repurchased 2.5 million shares for $325 million during the quarter, bringing the total for the trailing twelve months to 10.4 million shares for $1.300 billion.

Dividend

EA has declared a quarterly cash dividend of $0.19 per share of the Company's common stock. The dividend is payable on March 20, 2024 to shareholders of record as of the close of business on February 28, 2024.

Quarterly Financial Highlights

Three Months Ended

December 31,

(in $ millions, except per share amounts)

2023

2022

Full game

618

622

Live services and other

1,327

1,259

Total net revenue

1,945

1,881

Net income

290

204

Diluted earnings per share

1.07

0.73

Operating cash flow

1,264

1,123

Value of shares repurchased

325

325

Number of shares repurchased

2.5

2.6

Cash dividend paid

51

52

The following GAAP-based financial data3 and tax rate of 19% was used internally by company management to adjust its GAAP results in order to assess EA's operating results:

Three Months Ended December 31, 2023

GAAP-Based Financial Data

(in $ millions)

Statement
of
Operations

Acquisition-related
expenses

Change in

deferred
net revenue
(online- enabled
games)

Restructuring
and related
charges

Stock-based
compensation

Total net revenue

1,945

-

421

-

-

Cost of revenue

529

(16

)

-

-

(2

)

Gross profit

1,416

16

421

-

2

Total operating expenses

1,051

(21

)

-

-

(149

)

Operating income

365

37

421

-

151

Interest and other income (expense), net

17

-

-

-

-

Income before provision for income taxes

382

37

421

-

151

Number of shares used in computation:

Diluted

271

Trailing Twelve Months Financial Highlights

Twelve Months Ended

December 31,

(in $ millions)

2023

2022

Full game

2,054

2,003

Live services and other

5,603

5,374

Total net revenue

7,657

7,377

Net income

1,079

1,039

Operating cash flow

2,352

1,377

Value of shares repurchased

1,300

1,295

Number of shares repurchased

10.4

10.2

The following GAAP-based financial data3 and a tax rate of 19% was used internally by company management to adjust its GAAP results in order to assess EA's operating results.

Twelve Months Ended December 31, 2023

GAAP-Based Financial Data

(in $ millions)

Statement
of
Operations

Acquisition-related
expenses

Change in deferred
net revenue (online-enabled
games)

Restructuring
and related
charges

Stock-based
compensation

Total net revenue

7,657

-

53

-

-

Cost of revenue

1,801

(72

)

-

-

(8

)

Gross profit

5,856

72

53

-

8

Total operating expenses

4,397

(96

)

-

(158

)

(570

)

Operating income

1,459

168

53

158

578

Interest and other income (expense), net

51

-

-

-

-

Income before provision for income taxes

1,510

168

53

158

578

Operating Metric

The following is a calculation of our total net bookings2 for the periods presented:

Three Months Ended
December 31,

Twelve Months Ended
December 31,

(in $ millions)

2023

2022

2023

2022

Total net revenue

1,945

1,881

7,657

7,377

Change in deferred net revenue (online-enabled games)

421

461

53

(231)

Total net bookings

2,366

2,342

7,710

7,146

Business Outlook as of January 30, 2024

Fourth Quarter Fiscal Year 2024 Expectations - Ending March 31, 2024

Financial outlook metrics:

  • Net revenue is expected to be approximately $1.625 billion to $1.925 billion.
    • No change in deferred net revenue (online-enabled games) is expected.
  • Net income is expected to be approximately $54 million to $183 million.
  • Diluted earnings per share is expected to be approximately $0.20 to $0.68.
  • The Company estimates a share count of 271 million for purposes of calculating diluted earnings per share.

Operational outlook metric:

  • Net bookings2 is expected to be approximately $1.625 billion to $1.925 billion.

In addition, the following outlook for GAAP-based financial data3 and long-term tax rate of 19% are used internally by EA to adjust GAAP expectations to assess EA's operating results and plan for future periods:

Three Months Ended March 31, 2024

GAAP-Based Financial Data*

(in $ millions)

GAAP
Guidance
Range

Acquisition-related
expenses**

Change in deferred
net revenue
(online-enabled
games)

Restructuring
and related
charges

Stock-based
compensation

Total net revenue

1,625 to 1,925

-

-

-

-

Cost of revenue

360 to 410

(30

)

-

-

(5

)

Operating expense

1,125 to 1,205

(75

)

-

-

(150

)

Income before provision for income taxes

158 to 325

105

-

-

155

Net income

54 to 183

Number of shares used in computation:

Diluted shares

271

*The mid-point of the range has been used for purposes of presenting the reconciling items.

** Subsequent to December 31, 2023, we impaired certain acquisition-related intangible assets totaling approximately $70 million that will be recorded in the fourth quarter of fiscal year 2024.

Fiscal Year 2024 Expectations - Ending March 31, 2024

Financial outlook metrics:

  • Net revenue is expected to be approximately $7.408 billion to $7.708 billion.
    • Change in deferred net revenue (online-enabled games) is expected to be approximately ($19) million.
  • Net income is expected to be approximately $1.145 billion to $1.274 billion.
  • Diluted earnings per share is expected to be approximately $4.21 to $4.68.
  • Operating cash flow is expected to be approximately $1.950 billion to $2.100 billion.
  • The Company estimates a share count of 272 million for purposes of calculating diluted earnings per share.

Operational outlook metric:

  • Net bookings2 is expected to be approximately $7.389 billion to $7.689 billion.

In addition, the following outlook for GAAP-based financial data3 and long-term tax rate of 19% are used internally by EA to adjust GAAP expectations to assess EA's operating results and plan for future periods:

Twelve Months Ended March 31, 2024

GAAP-Based Financial Data*

(in $ millions)

GAAP
Guidance
Range

Acquisition-related
expenses**

Change in deferred
net revenue
(online-enabled
games)

Restructuring
and related
charges

Stock-based
compensation

Total net revenue

7,408 to 7,708

-

(19

)

-

-

Cost of revenue

1,713 to 1,763

(77

)

-

-

(11

)

Operating expense

4,271 to 4,351

(145

)

-

(3

)

(580

)

Income before provision for income taxes

1,487 to 1,654

222

(19

)

3

591

Net income

1,145 to 1,274

Number of shares used in computation:

Diluted shares

272

*The mid-point of the range has been used for purposes of presenting the reconciling items.

** Includes Q4 impairment of acquisition-related intangible assets as per previous table.

Conference Call and Supporting Documents

Electronic Arts will host a conference call on January 30, 2024 at 2:00 pm PT (5:00 pm ET) to review its results for the third quarter ended December 31, 2023 and its outlook for the future. During the course of the call, Electronic Arts may disclose material developments affecting its business and/or financial performance. Listeners may access the conference call live through the following dial-in number (888) 330-2446 (domestic) or (240) 789-2732 (international), using the conference code 5939891 or via webcast at EA's IR Website at http://ir.ea.com.

EA has posted a slide presentation with a financial model of EA's historical results and guidance on EA's IR Website. EA will also post the prepared remarks and a transcript from the conference call on EA's IR Website.

A dial-in replay of the conference call will be available until February 14, 2024 at (800) 770-2030 (domestic) or (647) 362-9199 (international) using conference code 5939891. An audio webcast replay of the conference call will be available for one year on EA's IR Website.

Forward-Looking Statements

Some statements set forth in this release, including the information relating to EA's expectations under the heading "Business Outlook as of January 30, 2024" and other information regarding EA's expectations contain forward-looking statements that are subject to change. Statements including words such as "anticipate," "believe," "expect," "intend," "estimate," "plan," "predict," "seek," "goal," "will," "may," "likely," "should," "could" (and the negative of any of these terms), "future" and similar expressions also identify forward-looking statements. These forward-looking statements are not guarantees of future performance and reflect management's current expectations. Our actual results could differ materially from those discussed in the forward-looking statements.

Some of the factors which could cause the Company's results to differ materially from its expectations include the following: sales of the Company's products and services; the Company's ability to develop and support digital products and services, including managing online security and privacy; outages of our products, services and technological infrastructure; the Company's ability to manage expenses; the competition in the interactive entertainment industry; governmental regulations; the effectiveness of the Company's sales and marketing programs; timely development and release of the Company's products and services; the Company's ability to realize the anticipated benefits of, and integrate, acquisitions; the consumer demand for, and the availability of an adequate supply of console hardware units; the Company's ability to predict consumer preferences among competing platforms; the Company's ability to develop and implement new technology; foreign currency exchange rate fluctuations; economic and geopolitical conditions; changes in our tax rates or tax laws; and other factors described in Part II, Item 1A of Electronic Arts' latest Quarterly Report on Form 10-Q under the heading "Risk Factors", as well as in other documents we have filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended March 31, 2023.

These forward-looking statements are current as of January 30, 2024. Electronic Arts assumes no obligation to revise or update any forward-looking statement for any reason, except as required by law. In addition, the preliminary financial results set forth in this release are estimates based on information currently available to Electronic Arts.

While Electronic Arts believes these estimates are meaningful, they could differ from the actual amounts that Electronic Arts ultimately reports in its Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2023. Electronic Arts assumes no obligation and does not intend to update these estimates prior to filing its Form 10-Q for the fiscal quarter ended December 31, 2023.

About Electronic Arts

Electronic Arts (NASDAQ: EA) is a global leader in digital interactive entertainment. The Company develops and delivers games, content and online services for Internet-connected consoles, mobile devices and personal computers.

In fiscal year 2023, EA posted GAAP net revenue of approximately $7.4 billion. Headquartered in Redwood City, California, EA is recognized for a portfolio of critically acclaimed, high-quality brands such as EA SPORTS FC™, Battlefield™, Apex Legends™, The Sims™, EA SPORTS Madden NFL, Need for Speed™, Titanfall™, Plants vs. Zombies™ and EA SPORTS F1®. More information about EA is available at www.ea.com/news.

EA, EA SPORTS, EA SPORTS FC, Battlefield, Need for Speed, Apex Legends, The Sims, Titanfall, and Plants vs. Zombies are trademarks of Electronic Arts Inc. John Madden, NFL, FIFA and F1 are the property of their respective owners and used with permission.

For additional information, please contact:

1 For more information on constant currency, please refer to the earnings slides available on EA's IR Website.

2 Net bookings is defined as the net amount of products and services sold digitally or sold-in physically in the period. Net bookings is calculated by adding total net revenue to the change in deferred net revenue for online-enabled games.

3 For more information about the nature of the GAAP-based financial data, please refer to EA's Form 10-K for the fiscal year ended March 31, 2023.

ELECTRONIC ARTS INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Operations

(in $ millions, except per share data)

Three Months Ended
December 31,

Nine Months Ended
December 31,

2023

2022

2023

2022

Net revenue

1,945

1,881

5,783

5,552

Cost of revenue

529

568

1,353

1,344

Gross profit

1,416

1,313

4,430

4,208

Operating expenses:

Research and development

584

556

1,782

1,693

Marketing and sales

276

256

785

723

General and administrative

170

162

506

503

Amortization and impairment of intangibles

21

50

70

132

Restructuring

-

-

3

-

Total operating expenses

1,051

1,024

3,146

3,051

Operating income

365

289

1,284

1,157

Interest and other income (expense), net

17

(7

)

45

(12

)

Income before provision for income taxes

382

282

1,329

1,145

Provision for income taxes

92

78

238

331

Net income

290

204

1,091

814

Earnings per share

Basic

1.08

0.74

4.03

2.93

Diluted

1.07

0.73

4.01

2.92

Number of shares used in computation

Basic

269

276

271

278

Diluted

271

278

272

279

Results (in $ millions, except per share data)

The following table reports the variance of the actuals versus our guidance provided on November 1, 2023 for the three months ended December 31, 2023 plus a comparison to the actuals for the three months ended December 31, 2022.

Three Months Ended December 31,

2023 Guidance
(Mid-Point)

2023
Actuals

2022
Actuals

Variance

Net revenue

Net revenue

1,925

20

1,945

1,881

GAAP-based financial data

Change in deferred net revenue (online-enabled games)1

425

(4

)

421

461

Cost of revenue

Cost of revenue

515

14

529

568

GAAP-based financial data

Acquisition-related expenses

(15

)

(1

)

(16

)

(26

)

Stock-based compensation

-

(2

)

(2

)

(2

)

Operating expenses

Operating expenses

1,080

(29

)

1,051

1,024

GAAP-based financial data

Acquisition-related expenses

(25

)

4

(21

)

(50

)

Stock-based compensation

(155

)

6

(149

)

(139

)

Income before tax

Income before tax

337

45

382

282

GAAP-based financial data

Acquisition-related expenses

40

(3

)

37

76

Change in deferred net revenue (online-enabled games)1

425

(4

)

421

461

Stock-based compensation

155

(4

)

151

141

Tax rate used for management reporting

19

%

19

%

19

%

Earnings per share

Basic

0.89

0.19

1.08

0.74

Diluted

0.88

0.19

1.07

0.73

Number of shares used in computation

Basic

270

(1

)

269

276

Diluted

272

(1

)

271

278

1The change in deferred net revenue (online-enabled games) in the unaudited condensed consolidated statements of cash flows does not necessarily equal the change in deferred net revenue (online-enabled games) in the unaudited condensed consolidated statements of operations primarily due to the impact of unrecognized gains/losses on cash flow hedges.

ELECTRONIC ARTS INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Balance Sheets

(in $ millions)

December 31, 2023

March 31, 20232

ASSETS

Current assets:

Cash and cash equivalents

2,742

2,424

Short-term investments

362

343

Receivables, net

867

684

Other current assets

378

518

Total current assets

4,349

3,969

Property and equipment, net

561

549

Goodwill

5,382

5,380

Acquisition-related intangibles, net

501

618

Deferred income taxes, net

2,375

2,462

Other assets

449

481

TOTAL ASSETS

13,617

13,459

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

62

99

Accrued and other current liabilities

1,299

1,285

Deferred net revenue (online-enabled games)

1,919

1,901

Total current liabilities

3,280

3,285

Senior notes, net

1,881

1,880

Income tax obligations

482

607

Deferred income taxes, net

2

1

Other liabilities

439

393

Total liabilities

6,084

6,166

Stockholders' equity:

Common stock

3

3

Retained earnings

7,614

7,357

Accumulated other comprehensive loss

(84

)

(67

)

Total stockholders' equity

7,533

7,293

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

13,617

13,459

2Derived from audited consolidated financial statements.

ELECTRONIC ARTS INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Cash Flows

(in $ millions)

Three Months Ended
December 31,

Nine Months Ended
December 31,

2023

2022

2023

2022

OPERATING ACTIVITIES

Net income

290

204

1,091

814

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation, amortization, accretion and impairment

82

122

255

363

Stock-based compensation

151

141

436

406

Change in assets and liabilities

Receivables, net

183

90

(184

)

(186

)

Other assets

112

(28

)

186

(53

)

Accounts payable

(93

)

(74

)

(36

)

(21

)

Accrued and other liabilities

138

297

(119

)

28

Deferred income taxes, net

(20

)

(47

)

88

(203

)

Deferred net revenue (online-enabled games)

421

418

18

(215

)

Net cash provided by operating activities

1,264

1,123

1,735

933

INVESTING ACTIVITIES

Capital expenditures

(52

)

(48

)

(148

)

(160

)

Proceeds from maturities and sales of short-term investments

148

77

450

243

Purchase of short-term investments

(147

)

(90

)

(460

)

(263

)

Net cash used in investing activities

(51

)

(61

)

(158

)

(180

)

FINANCING ACTIVITIES

Proceeds from issuance of common stock

3

3

43

47

Cash dividends paid

(51

)

(52

)

(154

)

(158

)

Cash paid to taxing authorities for shares withheld from employees

(58

)

(44

)

(178

)

(161

)

Repurchase and retirement of common stock

(325

)

(325

)

(975

)

(970

)

Net cash used in financing activities

(431

)

(418

)

(1,264

)

(1,242

)

Effect of foreign exchange on cash and cash equivalents

14

19

5

(41

)

Change in cash and cash equivalents

796

663

318

(530

)

Beginning cash and cash equivalents

1,946

1,539

2,424

2,732

Ending cash and cash equivalents

2,742

2,202

2,742

2,202

ELECTRONIC ARTS INC. AND SUBSIDIARIES

Unaudited Supplemental Financial Information and Business Metrics

(in $ millions, except per share data)

Q3

Q4

Q1

Q2

Q3

YOY %

FY23

FY23

FY24

FY24

FY24

Change

Net revenue

Net revenue

1,881

1,874

1,924

1,914

1,945

3

%

GAAP-based financial data

Change in deferred net revenue (online-enabled games)1

461

72

(346

)

(94

)

421

Gross profit

Gross profit

1,313

1,426

1,556

1,458

1,416

8

%

Gross profit (as a % of net revenue)

70

%

76

%

81

%

76

%

73

%

GAAP-based financial data

Acquisition-related expenses

26

25

16

15

16

Change in deferred net revenue (online-enabled games)1

461

72

(346

)

(94

)

421

Stock-based compensation

2

2

2

2

2

Operating income

Operating income

289

175

542

377

365

26

%

Operating income (as a % of net revenue)

15

%

9

%

28

%

20

%

19

%

GAAP-based financial data

Acquisition-related expenses

76

51

41

39

37

Change in deferred net revenue (online-enabled games)1

461

72

(346

)

(94

)

421

Restructuring and related charges

-

155

3

-

-

Stock-based compensation

141

142

130

155

151

Net income (loss)

Net income (loss)

204

(12

)

402

399

290

42

%

Net income (loss) (as a % of net revenue)

11

%

(1

%)

21

%

21

%

15

%

GAAP-based financial data

Acquisition-related expenses

76

51

41

39

37

Change in deferred net revenue (online-enabled games)1

461

72

(346

)

(94

)

421

Restructuring and related charges

-

155

3

-

-

Stock-based compensation

141

142

130

155

151

Tax rate used for management reporting

19

%

19

%

19

%

19

%

19

%

Diluted earnings (loss) per share

0.73

(0.04

)

1.47

1.47

1.07

47

%

Number of shares used in computation

Basic

276

274

272

271

269

Diluted

278

274

274

272

271

Anti-dilutive shares excluded for loss position3

-

1

-

-

-

1The change in deferred net revenue (online-enabled games) in the unaudited condensed consolidated statements of cash flows does not necessarily equal the change in deferred net revenue (online-enabled games) in the unaudited condensed consolidated statements of operations primarily due to the impact of unrecognized gains/losses on cash flow hedges.

3 Diluted earnings per share reflects the potential dilution from common shares (calculated using the treasury stock method), issuable through stock-based compensation plans. When the company incurs a loss, shares issuable though stock-based compensation plans are excluded from the diluted loss per share calculation as inclusion would be anti-dilutive.

ELECTRONIC ARTS INC. AND SUBSIDIARIES

Unaudited Supplemental Financial Information and Business Metrics

(in $ millions)

Q3

Q4

Q1

Q2

Q3

YOY %

FY23

FY23

FY24

FY24

FY24

Change

QUARTERLY NET REVENUE PRESENTATIONS

Net revenue by composition

Full game downloads

423

274

301

346

431

2

%

Packaged goods

199

98

142

275

187

(6

%)

Full game

622

372

443

621

618

(1

%)

Live services and other

1,259

1,502

1,481

1,293

1,327

5

%

Total net revenue

1,881

1,874

1,924

1,914

1,945

3

%

Full game

33

%

20

%

23

%

32

%

32

%

Live services and other

67

%

80

%

77

%

68

%

68

%

Total net revenue %

100

%

100

%

100

%

100

%

100

%

GAAP-based financial data

Full game downloads

45

(24

)

(21

)

24

32

Packaged goods

20

(24

)

(21

)

46

4

Full game

65

(48

)

(42

)

70

36

Live services and other

396

120

(304

)

(164

)

385

Total change in deferred net revenue (online-enabled games) by composition1

461

72

(346

)

(94

)

421

Net revenue by platform

Console

1,152

1,088

1,167

1,187

1,229

7

%

PC & Other

435

469

451

423

420

(3

%)

Mobile

294

317

306

304

296

1

%

Total net revenue

1,881

1,874

1,924

1,914

1,945

3

%

GAAP-based financial data

Console

423

11

(266

)

(35

)

377

PC & Other

29

47

(77

)

(34

)

33

Mobile

9

14

(3

)

(25

)

11

Total change in deferred net revenue (online-enabled games) by platform1

461

72

(346

)

(94

)

421

1The change in deferred net revenue (online-enabled games) in the unaudited condensed consolidated statements of cash flows does not necessarily equal the change in deferred net revenue (online-enabled games) in the unaudited condensed consolidated statements of operations primarily due to the impact of unrecognized gains/losses on cash flow hedges.

ELECTRONIC ARTS INC. AND SUBSIDIARIES

Unaudited Supplemental Financial Information and Business Metrics

(in $ millions)

Q3

Q4

Q1

Q2

Q3

YOY %

FY23

FY23

FY24

FY24

FY24

Change

CASH FLOW DATA

Operating cash flow

1,123

617

359

112

1,264

13

%

Operating cash flow - TTM

1,377

1,550

1,987

2,211

2,352

71

%

Capital expenditures

48

47

45

51

52

8

%

Capital expenditures - TTM

213

207

193

191

195

(8

%)

Repurchase and retirement of common stock

325

325

325

325

325

-

Cash dividends paid

52

52

52

51

51

(2

%)

DEPRECIATION

Depreciation expense

46

58

49

49

48

4

%

BALANCE SHEET DATA

Cash and cash equivalents

2,202

2,424

2,259

1,946

2,742

Short-term investments

351

343

343

359

362

Cash and cash equivalents, and short-term investments

2,553

2,767

2,602

2,305

3,104

22

%

Receivables, net

836

684

517

1,047

867

4

%

STOCK-BASED COMPENSATION

Cost of revenue

2

2

2

2

2

Research and development

95

96

93

113

108

Marketing and sales

15

15

11

13

14

General and administrative

29

29

24

27

27

Total stock-based compensation

141

142

130

155

151

RESTRUCTURING AND RELATED CHARGES

Restructuring

-

111

1

2

-

Office space reductions

-

44

2

(2

)

-

Total restructuring and related charges

-

155

3

-

-

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